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A man authorities said headed a complex Ponzi scheme that
cheated more than 2,500 people nationwide out of about $74
million was found guilty yesterday of fraud and money-laundering
charges.
The verdict against John Wayne Zidar came after a nearly
seven-week trial in U.S. District Court. He was convicted on
more than two dozen counts.
Despite the complex nature of the case, which involved the
testimony of about 80 witnesses, the jury took just two days to
render its decision.
Zidar was assisted in the Ponzi scheme by several people,
including Steven Moreland, his co-defendant in the case. The
jury also found Moreland guilty of 14 of the charges he faced,
acquitting him on six others.
Zidar and Moreland were initially indicted on more than 100
counts each of wire fraud, mail fraud, money laundering and
conspiracy to commit those crimes.
"I'm very ecstatic," said Assistant U.S. Attorney Carl
Blackstone, the lead prosecutor in the case. "The jury did its
job. They thoroughly looked at the evidence."
Blackstone said the government has recovered about $20 million
in cash and assets, which will go back to the victims.
"Of course we're disappointed," said Zidar's defense attorney,
Robert Caruso of Spokane. "But the jury has spoken and we
respect their decision."
Caruso said he believes there may be grounds for an appeal, but
he declined to say what those grounds were.
Caruso added that despite the unanimous verdict, Zidar "still
feels he was duped by the people he surrounded himself with."
Zidar, a 59-year-old former Washington state resident,
maintained a tight smile as U.S. District Court Judge Barbara
Rothstein read the verdict to a packed courtroom. Moreland sat
impassively.
The most importance witness for the prosecution, Blackstone
said, was IRS agent Kelly Lawrence, the lead investigator on the
case. She testified for about two days.
The defendants promised investors -- many of whom are
self-styled
anti-government "patriots" who believe the national economy is
inherently unstable -- returns of 120 percent on money through
access to a semi-secret entity of wealthy business interests
called the "private economic arena."
In his opening argument, Blackstone painted a portrait of Zidar
as a man who had little formal education or financial training;
he had worked as a car salesman, and as recently as 1997 as a
night janitor at a chain steakhouse in Florida, before finding
his niche running vast financial frauds.
According to court papers, Zidar in the late 1990s set up the
Vista International, Oakleaf International and Rosewood
International investment clubs, promising investors large
profits with little risk.
Investors who bought one "unit" of shares a club for $1,294, for
example, were promised a $3.4 million return in 10 years,
Blackstone said. But the clubs were little more than
sophisticated Ponzi schemes in which money from new investors is
used to pay inflated dividends to previous investors.
Eventually, these types of schemes collapse under their own
weight.
According to prosecutors, many of the investors were initially
attracted to those three Zidar programs through an Internet site
run by Zidar that catered to libertarians, constitutionalists,
tax protesters and members of the Patriot movement.
In classes run through that site, Zidar said the U.S. economy
could collapse if his investment program was widely known.
Former investors told the FBI that Zidar said he had access to
one of a half-dozen traders worldwide who controlled vague
entities called "prime bank instruments," which are quietly
issued by the world's largest banks and accessible only to a
few.
Instead, the defendants bought houses and expensive vehicles,
and laundered millions of dollars through bank accounts in
Samoa, the Bahamas and Costa Rica.
Zidar and his collaborators established bank accounts to
transfer investors' funds in the United States and overseas,
including using bank branches in Lakewood, Federal Way and
Enumclaw.
In April 2001, federal agents arrested Zidar, of Gardnerville,
Nev.; Moreland, 34, of Tyler, Texas; John Wesley Matthews, 55,
of Chandler, Ariz.; William Cravens, 60, of La Jolla, Calif.;
and Elizabeth Anne Phillips, 56, formerly of Ravensdale in
southeast King County.
Matthews, Cravens and Phillips had pleaded guilty before the
trial started, and testified for the government.
Larry Hall, 61, of St. Paul, Minn., also has pleaded guilty to
related charges.
Zidar and Moreland face more than 20 years in prison when
sentenced by Rothstein on Nov. 15.
Zidar and Moreland each spent several days on the witness stand
during the long trial. Zidar testified that he had invested his
clients' money in good faith. Moreland maintained that he was
duped by Zidar.
Caruso, in opening remarks, had said his client intends to repay
investors and shouldn't be punished for his reliance on three
devious former colleagues.
"They fed on their lust for money, and they took advantage of
him," Caruso said. "He relied on what people told him. That
doesn't make him a crook."
In his opening remarks, Moreland lawyer Ralph Hurvitz said that
Moreland didn't realize that any fraud had been committed until
he left the country for Costa Rica in 2000, audited the
businesses' books by computer -- and discovered millions of
dollars missing.
Afterward, Hurvitz declined comment on the long trial, other
than to say that "I'm tired, and I want to go to sleep."
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Regards,
Ragnar
CFO - http://www.gold-age.net
Liberty Impact!
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